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The best managers are global citizens

Study finds living abroad increases ability to make risky strategic decisions  

28 January 2013

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By Manju Manglani, Editor (@ManjuManglani)

The most confident and successful corporate managers lived abroad during their formative years, according to recent research.

It found that UK corporate managers who lived or studied abroad before the age of 23 are more likely to be confident in taking difficult and risky strategic decisions, such as acquiring foreign firms.

The findings are based on a study of over 2,000 acquisition decisions taken by board members at 561 UK listed companies.

The researchers found a direct link between the international background of board members and the activity of their firms in foreign markets.

“The more international the makeup of a board, the more likely the company is to have business activities abroad,” said Grzegorz Trojanowski, co-author of the research and associate professor in finance at the University of Exeter Business School.

Trojanowski noted that corporate managers with wide exposure to different cultures tend to see doing business in foreign countries as providing great opportunities and expect to get a positive result from their business activities in these markets.

The study found that managers who were exposed to multiple cultures when they were young had the following key attributes:

  • confidence in making challenging and risky business decisions;
  • confidence that their decisions in foreign cultures will be successful;
  • better at understanding and influencing people from diverse cultures;
  • an innate understanding of subtle differences in business practices and communication styles across cultures;
  • often part of a global network for support in decision making;
  • better at naturally ‘bridging’ or communicating with people from different cultures; and
  • more comfortable with making decisions based on intuition, in the absence of hard facts.

    Firms should consider how the individual experience of managers impacts on their overall strategy, suggests Trojanowski.

    “If they want to be active in foreign markets, they would do well to employ greater numbers of people who have had significant exposure to different cultures,” he said.

    “Globally, there are 40 per cent more first-generation migrants living in the world today than in 1990, meaning the global population is becoming more diverse. Businesses not only need to deal with this diversity, they have an opportunity to tap into this demographic to employ cross-culturally competent employees and managers.”

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